6 - CORPORATE AND UNION TRICKS

Labor unions and corporations - including non-profit corporations and incorporated trade associations - are prohibited from giving monetary contributions or "anything of value" to candidates and political parties. As discussed above, the four largest loopholes are widely exploited by corporations and unions. Non-profit corporations and labor unions use their resources to pay for issue advocacy campaigns and independent expenditures, while for-profit corporations and unions often give soft money or bundled contributions. In addition to using these loopholes, corporations and unions find more subtle ways to skirt the campaign finance law's prohibitions by providing valuable services to candidates.

THE COMMUNICATIONS LOOPHOLE

FEC regulations permit corporations and labor unions to make "express advocacy communications" to their so-called "restricted class." A corporation's restricted class is made up of its stockholders, executive and administrative personnel, and their families. The restricted class of a labor organization consists of its members, executive and administrative personnel, and their families. Like traditional corporations and labor unions, incorporated trade associations, membership associations, cooperatives, and corporations without capital stock may make express advocacy communications to members, executive and administrative personnel, and their families. In addition, if a trade association has corporate members, the trade association's restricted class includes the representatives of the corporate members with whom the association normally conducts business.⁵⁷
The communications loophole means that corporations and labor unions can urge their membership to vote for or against a particular candidate. The Chamber of Commerce and the American Medical Association (AMA) - with their combined membership of 245,000 individuals and their families - recognized the political importance of the communications loophole, and fought to keep it open in a recent lawsuit against the FEC. The membership organizations won. The Court of Appeals struck down FEC regulations that would have permitted partisan communications only to members with a significant financial interest in the organization.⁵⁸

The FEC recently expanded the communications loophole to permit corporations to engage in fund-raising activities for candidates, while they increase their ability to bundle contributions. As discussed in part IV, ATLA is taking advantage of the communications loophole to recommend that its members make contributions to particular candidates. ATLA can influence its members' willingness to make contributions and influence the timing and amount of the contributions. All of this is possible, even though it is illegal for ATLA to contribute directly to campaigns.

THE FACILITIES LOOPHOLE

Corporations and labor unions also can take advantage of the "facilities" loophole, permitting candidates to use corporate or union facilities for campaign activities, without such use counting as an illegal in-kind contribution. FEC regulations permit corporations and unions to invite candidates to ask for votes and solicit contributions on their headquarters, as long as only the restricted class is in attendance.⁵⁹ There is no requirement that the organization make equal time available for opposing candidates. It is even legal for the corporation to solicit contributions for the candidate; however, the corporation may not collect contributions on behalf of the candidate. The candidate, though, is free to solicit and accept contributions from everyone in attendance. Corporations and labor unions need not invite the media to cover the events.

Besides letting candidates hold fund-raisers at corporate or union headquarters, corporations and labor unions can permit candidates to use their office space and equipment, though in most cases the candidates have to reimburse the corporation for the reasonable commercial value of the facilities. One of the most popular perks stemming from this loophole is the use of corporate planes by candidates. A candidate may fly a corporate jet to any campaign event, as long as he or she reimburses the corporation. The problem is that FEC rules require that the candidate reimburse the corporation only for the price of a first class ticket on a commercial airline, an amount which comes nowhere near the price of a more comparable charter flight. The difference is, in effect, a valuable contribution to the candidate, while the flight itself provides the candidate with a useful service. In addition, corporate CEOs or lobbyists may accompany the candidate on a flight. In the first three months of 1996, Bob Dole's presidential campaign paid more than $180,000 to 24 corporations for flights. Among the corporations whose jets were used were American Home Products Corp., Circuit City Stores, Inc., and Textron Inc. When Bill Clinton was running for president in 1992, before he had the use of Air Force One, he also benefited from the use of corporate aircraft.⁶⁰

Corporations also can donate the services of their lawyers and accountants to assist the candidates' campaigns in complying with campaign finance laws. Under the law, lawyers and accountants can work for the campaign on "company time" and continue to receive their full salaries from their employers.